NZX Governance Explorer

Methodology

Understanding how we collect, process, and present NZX governance data

Data Sources

All data in the NZX Governance Explorer is sourced directly from official NZX market announcements and company disclosures. We focus specifically on:

  • Annual General Meeting (AGM) notices and results announcements
  • Special meeting resolutions and outcomes
  • Director appointment and resignation announcements
  • Annual reports containing director fees and board composition
  • Substantial security holder notices
  • Director trading disclosures

Data Extraction Approach

We employ a hybrid extraction methodology combining automated parsing with manual verification:

  • PDF Text Extraction: Automated extraction from PDF announcements using OCR and text parsing algorithms
  • Pattern Recognition: Machine learning models trained to identify key data points such as vote counts, director names, and fee structures
  • Manual Verification: Critical data points are manually reviewed for accuracy, particularly for complex resolutions or non-standard formats
  • Historical Backfill: Systematic review of historical announcements to build comprehensive time-series data

NZXplorer Governance Risk Score (GRS) v2.0

Our proprietary Governance Risk Score v2.0 evaluates the quality and independence of corporate governance practices using a comprehensive 6-component model on a 0-100 scale.

Current Data Coverage: 70% - We can currently calculate 70 out of 100 possible points using publicly available data. Scores are normalized to the 0-100 scale based on available data.

1. Executive Remuneration (25 points, 40% coverage)

Evaluates CEO pay reasonableness and pay-for-performance alignment.

  • CEO Pay Reasonableness (5 pts): Benchmarks CEO compensation against company size and sector
  • Pay-for-Performance Alignment (5 pts partial): Links executive pay changes to shareholder returns
  • Phase 2: Executive vs non-exec ratio, equity compensation breakdown

2. Board Structure (25 points, 100% coverage)

Assesses board composition, independence, and diversity.

  • Board Independence (10 pts): Percentage of independent vs executive directors
  • Board Size (5 pts): Optimal size for effective governance (6-10 directors preferred)
  • Board Diversity (5 pts): Gender balance on the board (40%+ female = max score)
  • Director Tenure Balance (5 pts): Mix of experience and fresh perspective (3-7 years avg optimal)

3. Shareholder Rights & Support (20 points, 100% coverage)

Measures shareholder voting outcomes and AGM support levels.

  • Average Shareholder Support (10 pts): Overall voting support across all resolutions (95%+ = max score)
  • Director Election Support (5 pts): Average support for director appointments and re-elections
  • Resolution Pass Rate (5 pts): Percentage of resolutions passed at AGM (100% = max score)

4. Board Effectiveness (15 points, 53% coverage)

Evaluates committee structure and meeting attendance.

  • Committee Structure (5 pts): Presence of audit, remuneration, and nomination committees
  • Meeting Attendance (3 pts partial): Director attendance rates (95%+ = max score)
  • Phase 2: Director overboarding analysis (external commitments)

5. Audit & Risk (10 points, 50% coverage)

Assesses auditor independence and risk management.

  • Auditor Independence (5 pts): Audit fees vs non-audit fees ratio (less than 10% non-audit = max score)
  • Phase 2: Auditor tenure and rotation practices

6. Remuneration Disclosure (5 points, 40% coverage)

Evaluates transparency of director compensation reporting.

  • Basic Disclosure (2 pts): Availability of executive and director fee data
  • Phase 2: Granular compensation breakdown, performance metrics linkage

Score Interpretation: Ratings are assigned based on normalized scores:

  • 80-100: Excellent - Leading governance practices
  • 65-79: Good - Strong governance with minor improvement areas
  • 50-64: Adequate - Meets basic standards but has notable gaps
  • 35-49: Poor - Significant governance concerns
  • 0-34: Very Poor - Major governance deficiencies

Phase 2 Roadmap: We are actively working to expand data coverage to 100% by adding detailed executive compensation breakdowns, director overboarding analysis, and auditor tenure tracking. These enhancements will provide a more comprehensive governance assessment.

ESG Profile Score

Our ESG Profile Score measures the transparency and quality of environmental, social, and governance disclosure practices using a simplified 3-component model on a 0-10 scale:

ESG Transparency (35%)

Frameworks Used (40%): Adoption of GRI, TCFD, UNGC, and other international reporting standards

Standalone Report (30%): Publication of dedicated ESG or sustainability reports

Data Disclosure (30%): Quality and completeness of emissions and diversity data

Climate & Targets (40%)

Emissions Disclosure (30%): Reporting of Scope 1, 2, and 3 greenhouse gas emissions

Net Zero Target (30%): Commitment to net zero with specific target year (2030-2050)

Emissions Trend (20%): Year-over-year improvement in emissions performance

Intensity Metrics (20%): Emissions per revenue or per employee metrics

Gender Diversity (25%)

Board Female % (50%): Percentage of women on board of directors

Leadership Female % (30%): Women in senior leadership positions

Employee Female % (10%): Gender balance across total workforce

Pay Gap Disclosure (10%): Transparency on gender pay gap

Score Interpretation: Scores range from 0-10:

  • 8.0-10.0: Excellent - Comprehensive disclosure and leading practices
  • 6.0-7.9: Good - Strong disclosure with room for improvement
  • 4.0-5.9: Adequate - Basic disclosure meeting minimum standards
  • 2.0-3.9: Poor - Limited disclosure with significant gaps
  • 0.0-1.9: Very Poor - Minimal or no ESG disclosure

Note: The ESG Profile Score (0-10) measures transparency and disclosure quality, focusing on the "E" and "S" aspects. It is separate from our Governance Risk Score (GRS, 0-100) which assesses the "G" aspect - board independence, shareholder rights, and meeting practices. Companies may have strong governance but limited ESG disclosure, or vice versa.

"Pay for Failure" Detection

We identify potential governance concerns where executive compensation appears misaligned with shareholder value creation:

Negative Returns + High Pay Increases

CEOs receiving substantial pay increases while delivering negative shareholder returns

Underperformance vs Sector

Companies significantly underperforming sector benchmarks while maintaining or increasing executive compensation

Departure Packages

Executives receiving substantial severance or golden parachutes following poor performance

Data Quality & Limitations

Coverage

Our database covers all NZX Main Board listed companies. Historical data availability varies by company and data type, with most complete coverage from 2020 onwards.

Update Frequency

Data is updated within 24-48 hours of official company announcements. Real-time market data may have a 15-minute delay.

Known Limitations

  • Some historical fee data may be incomplete or unavailable
  • Director independence classifications rely on public disclosures
  • Non-standard announcement formats may require additional processing time
  • Performance metrics depend on market data quality and availability

Important: This data is provided for informational purposes only and should not be considered investment advice. Users should verify critical data points with official company disclosures before making investment decisions.